15 Aug Economics
Q1. Why do we have to learn about the perfect capital market? With the perfect capitalmarket assumption, we learned the Modigliani and Miller theorem as well as different financialstructure no longer affects a firms value. It sounds very unrealistic, but we also learn a differentcase that this sort of assumption is relaxed and still the theorem or our intuition holds.What does this mean? Again, I raise a question for all learners in this class: Why do we need tolearn the perfect capital market? Do you think it (the assumption, of course) is helpful tounderstand the market dynamism, or not at all? Please use any concepts we learned in this classwhen you try to argue it. Attached to this is the pdf which describes the assignment.
